in the high court of malaya at kuala...
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IN THE HIGH COURT OF MALAYA AT KUALA LUMPUR
(COMMERCIAL DIVISION)
SUIT NO: WA-22IP-20-05/2016
BETWEEN
CHANEL (Registration No. 542052766) … PLAINTIFF
AND
1. MELWANI2 INTERNATIONAL SDN BHD (Company No. 880894-T) 2. LACHMANDAS ISHWARLAL MELWANI (Passport No. Z1808358) 3. ANG CHONG LENG (NRIC No. 840514-10-5515) … DEFENDANTS
(Heard together with)
IN THE HIGH COURT OF MALAYA AT KUALA LUMPUR
(COMMERCIAL DIVISION)
SUIT NO: WA-22IP-21-05/2016
BETWEEN
BURBERRY LIMITED (Registration No. 00162636) … PLAINTIFF
AND
1. MELWANI2 INTERNATIONAL SDN BHD (Company No. 880894-T) 2. LACHMANDAS ISHWARLAL MELWANI (Passport No. Z1808358) 3. ANG CHONG LENG (NRIC No. 840514-10-5515) … DEFENDANTS
2
(Heard together with)
IN THE HIGH COURT OF MALAYA AT KUALA LUMPUR
(COMMERCIAL DIVISION)
SUIT NO: WA-22IP-22-05/2016
BETWEEN
LOUIS VUITTON MALLETIER (Registration No. 318571064) … PLAINTIFF
AND
1. MELWANI2 INTERNATIONAL SDN BHD (Company No. 880894-T) 2. LACHMANDAS ISHWARLAL MELWANI (Passport No. Z1808358) 3. ANG CHONG LENG (NRIC No. 840514-10-5515) … DEFENDANTS
(Heard together with)
IN THE HIGH COURT OF MALAYA AT KUALA LUMPUR
(COMMERCIAL DIVISION)
SUIT NO: WA-22IP-23-05/2016
BETWEEN
GUCCIO GUCCI S.P.A. (Registration No. 03031300159) … PLAINTIFF
AND
1. MELWANI2 INTERNATIONAL SDN BHD (Company No. 880894-T) 2. LACHMANDAS ISHWARLAL MELWANI (Passport No. Z1808358) 3. ANG CHONG LENG (NRIC No. 840514-10-5515) … DEFENDANTS
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JUDGMENT
(4 summary judgment applications)
A. Introduction
1. This judgment discusses a novel question of whether an individual may be
personally liable for a company’s infringement of a registered trade mark
under s 38(1)(a) of the Trade Marks Act 1976 (TMA).
B. Background
2. In these 4 suits (4 Suits) –
(1) the plaintiff companies (Plaintiffs) are proprietors of registered trade
marks for various goods in Classes 3, 9, 14, 18, 24, 25 and 35
(Plaintiffs’ Registered Trade Marks);
(2) the first defendant company (1st Defendant) is a company
incorporated under the Companies Act 1965 [CA (1965)];
(3) the second defendant (2nd Defendant) is an Indian national who is a
director and owner of 78% shares in 1st Defendant; and
(4) the third defendant (3rd Defendant) is an individual who is a director
and owner of 17% shares in 1st Defendant.
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3. The 1st Defendant is not a distributor or retailer authorized by Plaintiffs to
sell goods bearing Plaintiffs’ Registered Trade Marks. However, 1st
Defendant sold goods bearing Plaintiffs’ Registered Trade Marks
(Infringing Goods) at 1st Defendant’s business premises at Regency
Suite, 30th Floor, Pacific Regency Hotel Suites, Jalan Punchak, off Jalan
Ramlee 50250 Kuala Lumpur (1st Defendant’s Premises).
4. Plaintiffs’ representatives had gone to 1st Defendant’s Premises and
purchased Infringing Goods on 27.4.2012, 23.11.2013, 29.3.2014,
14.6.2014, 7.9.2014 and 25.12.2014. Consequently, officers of the Ministry
of Domestic Trade, Co-operatives and Consumerism (Ministry) raided 1st
Defendant’s Premises on 22.7.2012, 16.8.2014, 20.9.2014 and 25.12.2014
and seized items of Infringing Goods (Ministry’s Raids).
5. The 4 Suits have been filed by Plaintiffs against 1st to 3rd Defendants
(Defendants) based on infringement of Plaintiffs’ Registered Trade Marks
under s 38(1)(a) TMA.
6. In the 4 Suits –
(1) Plaintiffs had served the writ and statement of claim of 4 Suits (4
SOC’s) on 1st and 2nd Defendants by way of substituted service. 1st
and 2nd Defendants however did not enter appearance;
(2) 3rd Defendant had entered appearance and had filed a defence;
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(3) Plaintiffs initially filed 4 applications for summary judgment against 3rd
Defendant (4 SJ Applications). Subsequently, Plaintiffs obtained
leave of Court to amend 4 SJ Applications to apply for summary
judgment against all the Defendants (4 Amended SJ Applications);
(4) after Plaintiffs had obtained leave of this Court to amend 4 SJ
Applications, 3rd Defendant filed 4 applications for security for costs
against Plaintiffs (4 SFC Applications);
(5) the Plaintiffs and 3rd Defendant consented to the following –
(a) 4 SFC Applications to be heard together before 4 Amended SJ
Applications; and
(b) 4 Amended SJ Applications to be heard together after the
disposal of 4 SFC Applications; and
(6) this Court dismissed 4 SFC Applications with costs on the ground that
those applications had not been made in good faith but were instead
filed with a collateral purpose to stifle 4 Amended SJ Applications
(Dismissal of 4 SFC Applications). No appeal to Court of Appeal has
been filed by 3rd Defendant against the Dismissal of 4 SFC
Applications.
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C. Relevant principles in deciding summary judgment application
7. The following trite principles apply in deciding 4 Amended SJ Applications:
(1) once Plaintiffs have fulfilled the following 3 matters in O 14 rr 1(1) and
2(1) of Rules of Court 2012 (RC), namely -
(a) 4 SOC’s have been served on Defendants;
(b) Defendants have entered appearance; and
(c) deponents of Plaintiffs have affirmed affidavits verifying the facts
on which 4 SOC’s are based and the belief of Plaintiff’s
deponents that there is no defence by Defendants to 4 SOC’s
- the burden then shifts to Defendants to resist 4 Amended SJ
Applications by satisfying this Court under O 14 rr 3(1) and 4(1)
RC that there is “an issue or question in dispute which ought to be
tried”. This is clear from the following 2 Federal Court cases -
(i) please see George Seah FJ’s (as he then was) judgment in
National Company for Foreign Trade v Kayu Raya Sdn
Bhd [1984] 1 CLJ (Rep) 283, at 285; and
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(ii) the judgment of Steve Shim CJ (Sabah & Sarawak) in
Cempaka Finance Bhd v Ho Lai Ying & Anor [2006] 3 CLJ
544, at 551-552; and
(2) even if Defendants cannot raise any triable issue, 4 Amended SJ
Applications should still be dismissed under O 14 r 3(1) RC if “there
ought for some other reason to be a trial”, namely there are
circumstances that ought to be investigated by the Court – please see
Federal Court’s judgment delivered by Mohd. Dzaiddin FCJ (as he
then was) in United Merchant Finance Bhd v Majlis Agama Islam
Negeri Johor [1999] 1 MLJ 657, at 666-668.
D. Judgment in default of defence should be entered against 1st and 2nd
Defendants
8. As 1st and 2nd Defendants did not enter appearance in the 4 Suits,
summary judgment cannot be made against them – please see O 14 r 1(1)
RC. Having said that, this Court is not inclined to dismiss 4 Amended SJ
Applications against 1st and 2nd Defendants. This is due to the following
reasons:
(1) 4 SOC’s claimed for, among others, injunction and inquiry of damages.
In view of the relief claimed by Plaintiffs, O 13 r 6(1) RC (not O 13 rr 1
to 5 RC) applies to 4 Suits. O 13 r 6(1) RC provides as follows -
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“Where a writ is endorsed with a claim of a description not
mentioned in rules 1 to 4, then, if any defendant fails to enter an
appearance, the plaintiff may, after the time limited for appearing
and upon filing an affidavit proving due service of the writ on that
defendant and, where the statement of claim was not endorsed on
or served with the writ, upon serving a statement of claim on him,
proceed with the action as if that defendant had entered an
appearance.”
(emphasis added).
By reason of O 13 r 6(1) RC, Plaintiffs could proceed with 4 Suits
against 1st and 2nd Defendants as if 1st and 2nd Defendants had
entered appearance;
(2) O 19 r 7(1) and (3) RC state as follows -
“O 19 r 7(1) Where the plaintiff makes against a defendant or
defendants a claim of a description not mentioned in rules 2 to 5,
then, if the defendant or all the defendants (where there is more
than one) fails or fail to serve a defence on the plaintiff, the plaintiff
may, after the expiration of the period fixed under these Rules for
service of the defence, apply to the Court for judgment, and on the
hearing of the application the Court shall give such judgment as
the plaintiff appears entitled to on his statement of claim.
…
r 7(3) An application under paragraph (1) shall be by
notice of application.”
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(emphasis added).
I am of the following view –
(a) due to the relief prayed for in 4 SOC’s, O 19 rr 2 to 6 RC do not
apply to 4 Suits;
(b) Prayer 7 of 4 Amended SJ Applications had prayed for further and
other relief as the Court thinks fit (Prayer 7). I am of the view that
Prayer 7 constitutes an application within the meaning of O 19 r
7(3) RC. The following appellate cases have held that the Court
may resort to Prayer 7 and grant any appropriate remedy as is
just:
(i) Salleh Abas FJ’s (as he then was) judgment in Federal Court
case of Lim Eng Kay v Jaafar Mohamed Said [1982] CLJ
(Rep) 190, at 198;
(ii) the decision of Gopal Sri Ram JCA (as he then was) in the
Court of Appeal in Tan Tek Seng @ Tan Chee Meng v
Suruhanjaya Perkhidmatan Pendidikan & Anor [1996] 2
CLJ 771, at 814-815; and
(iii) Zainun Ali JCA’s (as she then was) majority judgment in the
Court of Appeal in Pentadbir Tanah Daerah Pontian & Ors
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v Ossons Ventures Sdn Bhd [2009] 6 CLJ 713, at 723-724;
and
(c) O 19 r 7(1) of the Rules of the High Court 1980 (RHC) is identical
with O 19 r 7(1) RC. As such, previous cases which have entered
judgment in default of defence pursuant to O 19 r 7(1) RHC, can
be applied in the construction of O 19 r 7(1) RC. In the following
High Court cases, judgments in default of defence have been
entered under O19 r 7(1) RC –
(i) Steve Shim J’s (as he then was) decision in Microsoft Corp
v PC House (Imbi) Sdn Bhd [1998] 6 MLJ 402, at 403-404;
(ii) the judgment of Suriyadi J (as he then was) in Nik Mohd
Yusof bin Nik Ismail (suing on behalf of Persatuan
Pemilik dan Penduduk Serendah Golf Resort) v Majlis
Daerah Hulu Selangor [2005] 4 MLJ 338, at paragraphs 16
and 17;
(iii) Abdul Malik Ishak J’s (as he then was) judgment in
Muthammah a/p Govindan v Masri bin Mohamed & Anor
[2000] 5 MLJ 518, at 523-524; and
(iv) the decision of Tengku Maimun J (as she then was) in Ferco
Seating Systems (M) Sdn Bhd v The Product People Pty
Ltd [2009] 6 MLJ 874, at paragraphs 8 and 9;
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(3) despite the use of the mandatory term “shall” in O 19 r 7(1) RC, the
following cases have held that the Court has a discretion to enter
judgment in default of defence - Microsoft Corp and Muthammah.
Accordingly, the Court has a discretion to enter a judgment in default
of defence against 1st and 2nd Defendants and if the Court so
exercises its discretion to record a judgment in default of defence
against 1st and 2nd Defendants, the Court has a further discretion to
award whatever relief which the Court thinks is fit and just; and
(4) I exercise my discretion under O 19 r 7(1) RC –
(a) not to grant a mandatory injunction to compel 1st and 2nd
Defendants to -
(i) deliver Infringing Goods to Plaintiffs’ solicitors within 7 days
from the date of judgment in default of defence;
(ii) deliver all documents and records regarding Infringing Goods
to Plaintiffs’ solicitors within 7 days from the date of judgment
in default of defence;
(iii) affirm, file and serve an affidavit on Plaintiffs’ solicitors which
verifies the execution of the above delivery orders;
(iv) disclose information within 7 days from the date of judgment
in default of defence regarding the suppliers, customers and
details of supply and offer of Infringing Goods; and
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(v) affirm, file and serve an affidavit on Plaintiffs’ solicitors which
verifies the disclosure of the above information; and
(b) to grant the following orders -
(i) a perpetual injunction to restrain 1st and 2nd Defendants from
infringing Plaintiffs’ Registered Trade Marks;
(ii) an inquiry to be held by learned Registrar (Inquiry) to assess
damages for the infringement of Plaintiffs’ Registered Trade
Marks (Assessed Damages);
(iii) 1st and 2nd Defendants shall pay Assessed Damages to
Plaintiffs;
(iv) 1st and 2nd Defendants shall pay to Plaintiffs interest at the
rate of 5% per annum on the Assessed Damages from the
date of judgment in default of defence until the date of full
payment of Assessed Damages;
(v) costs of Inquiry shall be determined by learned Registrar and
shall be paid by 1st and 2nd Defendants to Plaintiffs;
(vi) costs of RM5,000.00 for each of 4 Suits shall be paid by 1st
and 2nd Defendants to Plaintiffs; and
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(vii) an allocatur fee shall be imposed on all the above costs in
accordance with Order 59 rule 7(4) RC.
E. Whether Plaintiffs can obtain summary judgment against 3rd
Defendant
E(1). Contention of parties
9. The Plaintiffs advanced the following submission, among others, in support
of 4 Amended SJ Applications against 3rd Defendant:
(1) 1st Defendant had infringed Plaintiffs’ Registered Trade Marks under s
38(1)(a) TMA (1st Defendant’s Infringement);
(2) 3rd Defendant was liable for 1st Defendant’s Infringement because –
(a) 3rd Defendant being a director and shareholder of 1st Defendant,
together with 2nd Defendant, had caused 1st Defendant’s
Infringement as part of a common and concerted design among
1st, 2nd and 3rd Defendants;
(b) 3rd Defendant together with 2nd Defendant had procured,
authorized, induced and assisted in the 1st Defendant’s
Infringement;
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(c) 3rd Defendant had actively marketed and promoted Infringing
Goods;
(d) 3rd Defendant was aware of 1st Defendant’s Infringement and
continued to be a director of 1st Defendant;
(e) 3rd Defendant had personally paid fines imposed by Shah Alam
Sessions Court on 1st Defendant (please see below); and
(f) 3rd Defendant is the directing mind and will of 1st Defendant; and
(3) Plaintiffs rely on, among others, the following Singapore High Court
cases –
(a) Belinda Ang Saw Ean J’s judgment in Creative Techonology Ltd
v Cosmos Trade-Nology Pte Ltd & Anor [2003] 3 SLR (R) 697;
and
(b) Yong Pung How CJ’s decision in Trade Facilities Pte Ltd & Ors
v Public Prosecutor [1995] 2 SLR (R) 7.
10. The 3rd Defendant resisted 4 Amended SJ Applications on the following
grounds, among others:
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(1) 4 Amended SJ Applications are based on fraud. O 14 r 1(2)(b) RC
does not allow summary judgment to be given in a suit which is based
on an allegation of fraud; and
(2) additionally or alternatively, 4 Amended SJ Applications should be
dismissed as there are issues to be tried in this case as follows –
(a) whether 3rd Defendant was involved in the daily management of
1st Defendant;
(b) whether 1st Defendant’s Infringement was committed by 2nd
Defendant alone or with the help of 3rd Defendant;
(c) whether documents regarding Infringing Goods [applied for in
prayer 2(b) of 4 Amended SJ Applications] are in 3rd Defendant’s
possession;
(d) whether the offence under s 8 of the Trade Descriptions Act 2011
(TDA) with which 1st Defendant was charged by the Public
Prosecutor (PP), could be attributed to 3rd Defendant;
(e) whether 3rd Defendant was liable for 1st Defendant’s Infringement
merely on the fact that 3rd Defendant was a director of 1st Plaintiff;
and
(f) whether the principle of Salomon v Salomon would exclude 3rd
Defendant’s liability for 1st Defendant’s Infringement.
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E(2). Elements of trade mark infringement under s 38(1)(a) TMA
11. The relevant part of s 38(1)(a) TMA is reproduced below:
“38. Infringement of a trade mark
(1) A registered trade mark is infringed by a person who, not being the
registered proprietor of the trade mark or registered user of the
trade mark using by way of permitted use, uses a mark which is
identical with it or so nearly resembling it as is likely to deceive or
cause confusion in the course of trade in relation to goods or
services in respect of which the trade mark is registered in such a
manner as to render the use of the mark likely to be taken either -
(a) as being use as a trade mark; …”
(emphasis added).
12. In the High Court case of Leo Pharmaceutical Products Ltd AS (Lovens
Kemiske Fabrk Produktionsaktieselskab) v Kotra Pharma (M) Sdn Bhd
(No 2) [2012] 10 CLJ 507, at paragraphs 83 and 84, Low Hop Bing J (as he
then was) explained the 5 elements of trade mark infringement under s
38(1)(a) TMA (5 Elements) as follows:
“[83] The law regulating the infringement of a trade mark is enacted in s.
38(1) which reads:
…
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[84] In order to succeed in this cause of action, it is incumbent upon
the plaintiff to prove that:
(a) the defendant is neither the registered proprietor nor the
registered user of the trade mark;
(b) the defendant used a mark identical with or so nearly
resembling the plaintiff’s registered trade mark as is likely to
deceive or cause confusion;
(c) the defendant was using the offending mark in the course of
trade;
(d) the defendant was using the offending mark in relation to
goods or service within the scope of the registration; and
(e) the defendant used the offending mark in such a manner as
to render the use likely to be taken either as being used as a
trade mark or as importing a reference to the registered
proprietor or the registered user or to their goods or services.
(See Fabrique Ebel Societe Anonyme v. Sykt Perniagaan Tukang
Jam City Port & Ors [1989] 1 CLJ 919; [1989] 1 CLJ (Rep) 537, 540 &
541 per Zakaria Yatim J (later FCJ) and applied by the same judge in A
Clouet & Co Pte Ltd v. Maya Toba Sdn Bhd [1996] 1 BLJ 239).”
(emphasis added).
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13. I am satisfied that the 5 Elements of 1st Defendant’s Infringement have
been proven by the following undisputed affidavit evidence adduced by
Plaintiffs in 4 Amended SJ Applications:
(1) 1st Defendant is neither the registered proprietor nor the registered
user of Plaintiffs’ Registered Trade Marks;
(2) 1st Defendant had used marks (Offending Marks) identical with or so
nearly resembling Plaintiffs’ Registered Trade Marks as was likely to
deceive or cause confusion;
(3) 1st Defendant had used Offending Marks in the course of trade;
(4) 1st Defendant had used Offending Marks in relation to goods within the
scope of registration of Plaintiffs’ Registered Trade Marks; and
(5) 1st Defendant had used Offending Marks in such a manner as to
render that use likely to be used as a trade mark.
14. The defence, affidavits and written submission of 3rd Defendant did not
dispute the commission of 1st Defendant’s Infringement.
15. The following High Court cases have granted summary judgment for trade
mark infringement under s 38(1) TMA:
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(1) Zakaria Yatim J’s (as he then was) decision in Fabrique Ebel Societe
Anonyme v Syarikat Perniagaan Tukang Jam City Port & Ors
[1988] 1 MLJ 188, at 193; and
(2) the judgment of Ramly Ali J (as he then was) in –
(a) Acushnet Company v Metro Golf Manufacturing Sdn Bhd
[2006] 7 CLJ 557, at paragraph 102; and
(b) Abercrombie & Fitch Co & Anor v Fashion Factory Outlet KL
Sdn Bhd & Ors [2008] 7 CLJ 413, at paragraph 86.
E(3). Whether Court should pierce 1st Defendant’s corporate veil
16. I am of the following view regarding the piercing or lifting of a company’s
corporate veil:
(1) a company is a legal person which is separate from its directors,
shareholders and employees (please see the present s 20(a) of the
Companies Act 2016). Accordingly, the general rule is that a
company’s directors, shareholders and employees should not be
personally liable for the company’s act or omission;
(2) the Court should only pierce or lift a company’s corporate veil in
exceptional circumstances provided by –
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(a) statute (Statutory Exception). An example of Statutory
Exception is the Court of Appeal’s judgment delivered by Abdul
Malik Ishak JCA in Mackt Logistics (M) Sdn Bhd v Malaysian
Airlines System Bhd [2014] 5 CLJ 851, at 865; and
(b) case law (Case Law Exception);
(3) there is a difference between the piercing of a corporate veil and its
lifting. A company’s corporate veil is pierced by a party when the party
seeks to impose personal liability on an individual who may or may not
be the company’s director, shareholder or employee. The Court lifts
the corporate veil of a company to ascertain the true factual position
without imposing any personal liability on a particular individual [please
see Staughton LJ’s judgment in the English Court of Appeal case of
Atlas Maritime Co SA v Avalon Maritime Ltd (The Coral Rose) (No.
1) [1991] 4 All ER 769, at 779, which was followed in KTL Sdn Bhd &
Anor v Leong Oow Lai & other cases [2014] AMEJ 1458, at
paragraphs 66 and 67];
(4) piercing or lifting a company’s corporate veil is not a cause of action in
itself – please see Nallini Pathmanathan J’s (as she then was)
judgment in the High Court case of Deepak Jaikishan a/l Jaikishhan
Rewachand & Anor v Intrared Sdn Bhd (previously known as
Reetaj City Centre Sdn Bhd and formerly known as KFH Reetaj
Sdn Bhd) & Anor [2013] 7 MLJ 437, at 458;
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(5) piercing or lifting a corporate veil is also not a remedy in itself. Having
said that, there is nothing in law to prohibit a party from applying to
Court for a declaration that an individual is the controller, alter ego or
“directing mind and will” of a company;
(6) to pierce or lift a corporate veil, 3 recent Federal Court judgments
require 2 conditions to be fulfilled cumulatively (2 Conditions), namely
–
(a) the piercing or lifting of a corporate veil is in the interest of justice
(1st Condition); and
(b) there exists special circumstances to pierce or lift the corporate
veil (2nd Condition), such as -
(i) there has been commission of actual fraud or Common Law
fraud;
(ii) equitable fraud or constructive fraud has been committed;
(iii) to prevent evasion of liability; or
(iv) to prevent an abuse of corporate personality.
I rely on the following 3 Federal Court judgments which have laid down
the 2 Conditions –
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(aa) Hasan Lah FCJ’s judgment in Solid Investment Ltd v Alcatel
Lucent (M) Sdn Bhd [2014] 3 CLJ 73, at 92;
(bb) the decision of Richard Malanjum CJ (Sabah & Sarawak) in
Gurbachan Singh s/o Bagawan Singh & Ors v Vellasamy
s/o Pennusamy & Ors [2015] 1 MLJ 773, at paragraphs 96-99;
and
(cc) the judgment of Richard Malanjum CJ (Sabah & Sarawak) in
Giga Engineering & Construction Sdn Bhd v Yip Chee
Seng & Sons Sdn Bhd & Anor [2015] 9 CLJ 537, at
paragraphs 39, 44 and 45;
(7) in respect of the 2nd Condition –
(a) the categories of special circumstances to pierce or lift the
corporate veil, are not closed; and
(b) the 2nd Condition is laid down by case law and should not be
applied in an inflexible manner as if the 2nd Condition is a strict
mandatory statutory requirement; and
(8) whether the Court should exercise its discretion to pierce or lift the
corporate veil is a question of fact dependent upon the particular
circumstances of the case in question. As such, decided cases on this
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matter are not binding precedents from the view point of the stare
decisis doctrine.
17. The 4 Suits and 4 Amended SJ Applications sought to pierce 1st
Defendant’s corporate veil so as to impose personal liability on 3rd
Defendant for 1st Defendant’s Infringement.
18. Plaintiffs had adduced affidavit evidence which affirmed the following:
(1) in respect of Infringing Goods, PP had instituted criminal proceedings
against, among others, 1st Defendant, in the Shah Alam Sessions
Court for offences under s 8 of the Trade Descriptions Act 2011
(Criminal Charges);
(2) 1st Defendant had pleaded guilty to Criminal Charges and was fined a
total of RM318,000.00 (RM318,000 Fine); and
(3) RM318,000 Fine had been personally paid by 3rd Defendant
19. The Plaintiffs’ sworn averment in their affidavits that 3rd Defendant had
personally paid RM318,000 Fine, had not been denied by 3rd Defendant in
his affidavit in opposition to 4 Amended SJ Applications. It is trite law that
any factual averment in a party’s affidavit which has not been denied by the
opposing party by way of affidavit, is deemed to be admitted by the
opposing party – please see the Federal Court’s judgment delivered by
Chong Siew Fai CJ (Sabah & Sarawak) in Sunrise Sdn Bhd v First
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Profile (M) Sdn Bhd & Anor [1996] 3 MLJ 533, at 541. Consequently, 3rd
Defendant is deemed to have accepted Plaintiffs’ allegation that 3rd
Defendant has personally paid RM318,000 Fine.
20. I am of the view that the 2 Conditions for the application of Case Law
Exception, have been fulfilled in the 4 Amended SJ Applications. This
decision is based on the following evidence and reasons:
(1) the 1st Condition is satisfied (the piercing of 1st Defendant’s corporate
veil is in the interest of justice) as follows -
(a) 3rd Defendant was under no obligation whatsoever to pay
RM318,000 Fine for 1st Defendant and yet, the 3rd Defendant did
so. It is inconceivable for any reasonable individual to pay a hefty
fine imposed on a company if that individual is not the controller,
alter ego and the “directing mind and will” of the company;
(b) the defence and affidavit of 3rd Defendant in all 4 Suits, claimed to
have resigned as a director of 1st Defendant “at the end of 2014”.
Such an allegation cannot be accepted for the following reasons -
(i) if 3rd Defendant had indeed resigned as a director of 1st
Defendant, there would be no reason for 3rd Defendant to
have personally paid RM318,000 Fine for 1st Defendant;
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(ii) Plaintiffs’ affidavits have exhibited a search dated 28.4.2016
from the records of Companies Commission of Malaysia
(SSM) which showed that 3rd Defendant is still a director of 1st
Defendant (SSM’s Record). No documentary evidence had
been adduced by 3rd Defendant to show that SSM’s Record
was erroneous and 3rd Defendant was no longer 1st
Defendant’s director; and
(iii) 3rd Defendant had not adduced any documentary evidence
regarding his alleged resignation as 1st Defendant’s director;
and
(c) according to SSM’s Record, 3rd Defendant owns 170,000 paid-up
shares (of nominal value of RM1 for each share) in 1st Defendant.
Hence, 3rd Defendant is not a complete stranger to 1st Defendant.
On the contrary, 3rd Defendant has a substantial financial interest
in 1st Defendant. There is no evidence that 1st Defendant has any
other business save for selling Infringing Goods. Accordingly, 3rd
Defendant could not claim ignorance of 1st Defendant’s
Infringement when he had invested substantially in 1st Defendant
which only sold Infringing Goods; and
(2) the 2nd Condition is fulfilled in 4 Suits because there exists the
following special circumstances to pierce 1st Defendant’s corporate veil
–
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(a) 3rd Defendant should not evade statutory liability for trade mark
infringement under s 38(1)(a) TMA owed to Plaintiffs; and/or
(d) 1st Defendant’s corporate personality should not be abused by 3rd
Defendant.
21. Additionally or alternatively –
(1) 3rd Defendant has the legal onus to raise a triable issue so as to resist
successfully 4 Amended SJ Applications [please see the above sub-
paragraph 7(1)]. Based on the evidence and reasons as elaborated in
the above paragraph 20, I am not satisfied that 3rd Defendant has
successfully discharged the legal burden to raise an issue which
should be tried in the 4 Suits; and
(2) there is no “other reason for trial” in the 4 Suits as there is no
circumstance which ought to be investigated in these cases, especially
in light of 3rd Defendant’s payment of RM318,000 Fine for 1st
Defendant.
22. I am constrained to reject the following contentions advanced by 3rd
Defendant’s learned counsel:
(1) the 4 Suits and 4 Amended SJ Applications are not based on fraud but
are premised on trade mark infringement under s 38(1)(a) TMA; and
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(2) 3rd Defendant can be the controller, alter ego and the “directing mind
and will” of 1st Defendant so as to be personally responsible for 1st
Defendant’s Infringement without –
(a) being involved in the daily management of 1st Defendant;
(b) having possession of documents regarding Infringing Goods; and
(c) being convicted for any offence under TMA and/or TDA in respect
of Infringing Goods. It is to be noted that the Criminal Charges are
separate from the 4 Suits.
F. Court’s decision
23. Premised on the above evidence and reasons, the following summary
judgment is granted against 3rd Defendant (Summary Judgment):
(1) a perpetual injunction to restrain 3rd Defendant from infringing
Plaintiffs’ Registered Trade Marks;
(2) a perpetual mandatory injunction to compel 3rd Defendant to -
(a) deliver Infringing Goods to Plaintiffs’ solicitors within 7 days from
the date of Summary Judgment; and
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(b) deliver all documents and records regarding Infringing Goods to
Plaintiffs’ solicitors within 7 days from the date of Summary
Judgment;
(c) affirm, file and serve an affidavit on Plaintiffs’ solicitors which
verifies the execution of the above delivery orders;
(d) disclose information within 7 days from the date of Summary
Judgment regarding the suppliers, customers and details of
supply and offer of Infringing Goods; and
(e) affirm, file and serve an affidavit on Plaintiffs’ solicitors which
verifies the disclosure of the above information;
(3) Inquiry to be held by learned Registrar to ascertain Assessed
Damages;
(4) an order that 3rd Defendant shall pay Assessed Damages to Plaintiffs;
(5) an order that 3rd Defendant shall pay to Plaintiffs interest at the rate of
5% per annum on Assessed Damages from the date of Summary
Judgment until the date of full payment of Assessed Damages;
(6) costs of Inquiry shall be determined by learned Registrar and shall be
paid by 3rd Defendant to Plaintiffs;
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(7) costs of RM8,000.00 for each of 4 Amended SJ Applications shall be
paid by 3rd Defendant to Plaintiffs; and
(8) an allocatur fee shall be imposed on all the above costs in accordance
with Order 59 rule 7(4) RC.
WONG KIAN KHEONG Judicial Commissioner
High Court (Commercial Division) Kuala Lumpur
DATE: 28 FEBRUARY 2017
Counsel for Plaintiff: Mr. Jasdev Singh Gill, Ms. Geraldine Shamini &
Mr. Sukumar s/o Karuppiah (Messrs Jasdev Chambers)
Counsel for 3rd Defendant: Mr. Loo Chay Meng & Puan Siti Fariza binti Faris
(Messrs Abu Hassan & Associates)